Businesses Wary of Using Virus Tax Perk Absent More IRS Guidance

Some businesses are hesitant to claim a tax perk meant to encourage them to retain employees during the pandemic because they aren’t sure they qualify and fear potential penalties and reputational damage if they guess wrong.

The employee retention credit enacted by the coronavirus relief law (Public Law 116-136), known as the CARES Act, is a fully refundable tax credit equal to 50% of up to $10,000 in wages an employer pays to each employee—in other words $5,000 per employee. Employers can immediately access this benefit by reducing the payroll taxes they deposit on a ...